Nvidia's Board Backed Jensen Huang on Sunday and Announced His Resignation on Thursday. Its CFO, Now Also Interim CEO, Has Earnings in Five Days.
On Sunday, November 8, Nvidia's board opened an investigation into reports that Jensen Huang had been the target of a foreign intelligence effort, and said in the same statement that it had confidence in him. On Thursday morning, November 12, Nvidia announced that he had resigned as president, CEO and member of the board, effective immediately.
The 8-K says the board accepted the resignation on November 11. It does not give a reason. Huang co-founded the company in 1993 and ran it for 33 years. He was not quoted in the press release.
Two appointments replace him. CFO Colette Kress becomes interim CEO and keeps the CFO job. Harvey C. Jones, a director since 1993 and a former CEO of Synopsys, becomes Nvidia's first-ever board chair. And on Tuesday, November 17, five days after the announcement, Nvidia reports its fiscal third quarter as scheduled. I think that date is the most important fact in the release.
Four Days, Day by Day
The week moved fast, and each step came from a different direction: Huang's own email, a lawsuit, press reports, the board and Congress.
| Date | What happened |
|---|---|
| Wed, Nov 4 | Three House chairs (Mast, Moolenaar, Crawford) write to Huang asking him to appear |
| Sun, Nov 8 | Huang tells employees he was “unfaithful to my wife”; board opens an independent investigation and says it has confidence in him |
| Mon, Nov 9 | Stock closes down 4.3 percent at $178.67; a proposed shareholder class action is filed against Nvidia and Huang in federal court in Northern California |
| Wed, Nov 11 | The New York Times reports a relationship with Kimberly Powell, a vice president who reports to Huang; board accepts his resignation, per the 8-K |
| Thu, Nov 12 | Resignation announced; Reuters reports a relationship with a second, unnamed employee; Rep. Brian Mast says Huang is willing to appear |
| Fri, Nov 13 | Senate Banking chairman Tim Scott's requests are public: Huang on December 3, Commerce Secretary Howard Lutnick on December 10 |
| Tue, Nov 17 | Fiscal Q3 results around 1:20 p.m. PT, call at 2 p.m. PT |
The national security thread runs underneath all of it. The Financial Times and The New York Times reported that Huang had a relationship with Alice Huang, a former executive at Singapore-based Megaspeed whom US intelligence officials suspect of working for China. The two are not related. China's foreign ministry has called the spying allegations unsubstantiated, and PBS reports that President Trump said the FBI is looking into it. Nvidia's board said on Sunday it had no reason to believe national security or Nvidia secrets had been compromised.
One Person, Two of the Top Jobs
Kress joined Nvidia in September 2013 and has run its finance organization since. Before that she worked in finance at Texas Instruments, Microsoft and Cisco, Al Jazeera and PBS report. In the release she said the company's “strength has always come from its people.” Jones said the board has “full confidence” in her and the leadership team.
The arrangement is unusual for a company this size. The person who signs off on the numbers, and who normally walks analysts through them, is now also the person accountable for strategy, customers and the product roadmap. The release says the board expects operations, customer commitments and the roadmap to continue without interruption. It does not restate guidance.
The board split is the other structural change. CNBC notes that Nvidia had no board chair before Thursday. For 33 years the founder ran the company and sat on the board without a separate chair above him. Now the chair is a director who joined in the founding year. The board says it will consider internal and external candidates for the permanent job.
What the Market Did
The shares fell more than 13 percent at the open on Thursday, then recovered most of that and closed down 4.34 percent at $166.19, CNBC and Yahoo Finance report. That left the company just above $4 trillion in market value. On Friday the stock was down about 2 percent, per CNBC.
The longer view is harsher. CNBC puts the October 6 closing high at $239.24. Thursday's close is about 31 percent below it. Huang owns about 3.6 percent of the company, Yahoo Finance reports, a stake CNBC values at roughly $140 billion, largely held in trusts with his wife, Lori.
Some of the cuts came before the announcement. Baird and Stifel both moved on Wednesday, and Baird cited uncertainty over Huang's tenure among its reasons for the downgrade.
| Firm | Old target | New target | Rating |
|---|---|---|---|
| Baird | $500 | $200 | Cut to neutral |
| Bernstein | $400 | $200 | Downgraded |
| Stifel | $315 | $205 | Buy, kept |
| Cantor Fitzgerald | $350 | $250 | Overweight, kept |
Sources: CNBC, CNBC, Benzinga, Yahoo Finance.
Congress Is Now Booking Dates
Leaving Nvidia did not end Huang's week. The three House chairs who wrote to him on November 4 are Brian Mast of Foreign Affairs, John Moolenaar of the China select committee and Rick Crawford of Intelligence. On Thursday Mast said Huang was willing to appear. TechCrunch, citing Bloomberg and NBC News, reports a closed-door session expected by Thanksgiving that Mast expects to be recorded and transcribed. CBS News reports that a separate letter on Thursday asked for a closed-door interview on December 1, with a subpoena if he did not accept by Friday evening.
The Senate is moving too. Banking Committee chairman Tim Scott asked Huang to testify on December 3 and Lutnick on December 10, and said the committee is prepared to use subpoenas if they do not come voluntarily, Fortune and CBS report. The committee has jurisdiction over export controls. That is where this story touches the AI market directly: a hearing on Nvidia's exports to China, with the Commerce Secretary a week after the former CEO, is a hearing about who gets the chips.
The shareholder suit filed on Monday, by investor Mark Kistenmacher according to the Associated Press, alleges that Nvidia and Huang misled investors about the company's dealings with Megaspeed. The claims are untested in court.
Our Take
The board moved from public confidence to accepting a resignation in three days, and the order of events tells you why. The board has not said why. The Sunday statement was about national security, and on that question it has not changed its position that it saw no compromise. The new fact by Wednesday was a reported relationship with an executive who reported to Huang, and the board met that afternoon, The New York Times reported, according to CNBC. In my reading, that is a governance problem a board cannot investigate its way past while the CEO stays in the chair. I do not know what the board's investigation found, and neither does anyone outside the room; the 8-K does not say.
What I do know is that Nvidia has put its single most credible operator in front of the market at the worst possible moment. Kress has been the voice of Nvidia's numbers for more than a decade, so Tuesday's call will sound familiar on revenue, margins and supply. It will not sound familiar on vision, and that was always Huang's part of the call. Expect analysts to spend their questions on customers, not quarters: whether any large buyer has paused orders, and whether the China export story changes because of who is now testifying about it.
For anyone building on Nvidia hardware, I do not expect much to change in the next 90 days. Chips already ordered will ship, and CUDA does not depend on one person. The risk is slower and harder to see: a company that made big bets on a single founder's say-so, from the Hugging Face deal to its stakes in AI labs, now needs a committee to make the next one.
Three Signposts for the Next 60 Days
First, Tuesday's guidance: whether Nvidia gives a fourth-quarter outlook in its usual form, and whether Kress says anything about order changes since November 8. Second, the hearings: whether Huang appears before the House committees and on December 3 voluntarily, or only under subpoena, and what Lutnick says about export licenses on December 10. Third, the search: whether the board names a permanent CEO from inside, which would point to continuity, or from outside, which would tell you it wants a reset.
Sources: Nvidia Form 8-K, Nvidia press release, CNBC live updates, CNBC, CNBC (Friday), Yahoo Finance, PBS NewsHour, Al Jazeera, TechCrunch, CBS News, Fortune, Associated Press, Benzinga.